A complete guide to Nidhi Company registration in India — learn about eligibility criteria, incorporation process, compliance requirements, and how Nidhi Companies facilitate savings among their members.
What Is a Nidhi Company?
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) recognised under Section 406 of the Companies Act, 2013, and regulated by the Nidhi Rules, 2014 (amended in 2019 and 2022). The primary purpose of a Nidhi Company is to cultivate the habit of savings and thrift among its members and to provide mutual benefit through accepting deposits from, and lending to, its members only.
Unlike regular NBFCs, Nidhi Companies are exempt from the core provisions of the RBI Act related to NBFCs. They are regulated by the Ministry of Corporate Affairs (MCA) instead of the Reserve Bank of India (RBI), making them simpler to operate. However, they can only transact with their members — they cannot accept deposits from or lend to non-members.
Key Features of Nidhi Companies
- Members Only: Can only accept deposits from and lend to its own members (shareholders).
- No RBI Licence: Exempt from RBI's NBFC registration requirements.
- Regulated by MCA: Governed by Companies Act, 2013, and Nidhi Rules, 2014.
- Democratic Structure: Operates on the principle of mutual benefit and thrift.
- Limited Scope: Cannot deal in chit funds, hire purchase, insurance, or securities.
- Local Operations: Primarily operates within a local community or region.
Eligibility Criteria
| Requirement | Details |
|---|---|
| Company Type | Must be incorporated as a Public Limited Company |
| Minimum Members | 7 members (shareholders) at incorporation; must reach 200 members within 1 year |
| Minimum Directors | 3 directors |
| Minimum Capital | ₹5 lakh equity share capital (paid-up) |
| Net Owned Funds | Must reach ₹10 lakh within 1 year of incorporation |
| Net Owned Funds to Deposits | Ratio of 1:20 (can accept deposits up to 20 times net owned funds) |
| Unencumbered Deposits | At least 10% of outstanding deposits must be in scheduled bank deposits |
Step-by-Step Registration Process
Step 1: Obtain DSC and DIN for Directors
All proposed directors (minimum 3) must obtain Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) from the MCA portal.
Step 2: Apply for Name Reservation
Reserve the company name through the RUN (Reserve Unique Name) service. The name must include "Nidhi Limited" as the last words. For example, "ABC Nidhi Limited".
Step 3: File SPICe+ Incorporation Form
File the SPICe+ form with the MCA including:
- Memorandum of Association (MOA) — must state the main objective as cultivating the habit of thrift and savings among members
- Articles of Association (AOA) — must contain provisions required under Nidhi Rules
- Details of all directors and initial members
- Registered office address proof
Step 4: Certificate of Incorporation
Upon approval, the RoC issues the Certificate of Incorporation with the company's CIN. The company is now incorporated as a Public Limited Company with "Nidhi Limited" in its name.
Step 5: Apply for Nidhi Status
After incorporation, the company must file Form NDH-4 with the Central Government (MCA) to be declared as a Nidhi Company. The company must meet the following conditions within 120 days of incorporation:
- Minimum 200 members
- Net Owned Funds of at least ₹20 lakh
- Net Owned Funds to deposits ratio of 1:20
- At least 10% of deposits in unencumbered term deposits with scheduled banks
Documents Required
- PAN and Aadhaar of all directors and initial members
- Passport-size photographs of directors
- Address proof of registered office (utility bill + rent agreement/ownership deed + NOC)
- MOA and AOA customised for Nidhi Company
- Declaration by first directors in Form INC-9
- Consent of directors in Form DIR-2
Lending and Deposit Restrictions
| Activity | Rule |
|---|---|
| Maximum loan to one member | Lower of ₹15 lakh or 2% of net owned funds (for gold loans: lower of ₹2 lakh or 2% of NOF) |
| Interest rate on deposits | Maximum 2% above the highest rate offered by nationalised banks on savings deposits |
| Interest rate on loans | Maximum 7.5% above the highest rate offered by nationalised banks on fixed deposits |
| Deposit maturity | Fixed deposits: 6 months to 60 months; Recurring deposits: 12 months to 60 months |
| Branches | Can open branches within the same state (district-level restrictions apply) |
Annual Compliance
- Form NDH-1: Half-yearly return to be filed with the RoC within 30 days of the end of each half year
- Form NDH-3: Annual return of statutory compliances to be filed with the RoC
- AOC-4: Annual financial statements filing
- MGT-7: Annual return filing
- Statutory Audit: Annual audit by a practising Chartered Accountant
- Income Tax Return: File ITR-6 by October 31
- Board Meetings: Minimum 4 per year
- AGM: Within 6 months of financial year end
How The Ledger Company Can Help
Setting up a Nidhi Company requires careful planning and strict compliance with MCA rules. The Ledger Company offers end-to-end Nidhi Company registration services — from company incorporation and MOA/AOA drafting to NDH-4 filing and ongoing compliance management. Our team ensures you meet all eligibility requirements and maintain continuous compliance with Nidhi Rules. Book a consultation to start your Nidhi Company journey.
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